Accounting-II final project

Topic: What impact does Accounting information

has on Managerial Decision Making

Group Members:
Ammara Kausar Amna Maryam Anum saba Nazish Muzzafar Sana Afzal Sania Muneer

Nazish Muzzafar

Introduction
Decision making is the process of selection best one from two or more alternatives to achieve the desired results or outcomes. To decide means to come to a conclusion for follow up actions. It is the primary function of management.

What does Accounting Information means????

Accounting information is collection, storage and processing of financial and accounting data that is used by decision makers.

What does Accounting Information System means????

An accounting information system is generally a computerbased method for tracking accounting activity.

Role Of Accounting Information:

The primary role of accounting information is to provide useful information for decision making purposes. Accounting information is useful in the performance of all administrative activities, where the administration becomes more efficient when the accountants provides accurate and complete information for the management.

Sania Muneer

Research objectives
This document seeks to establish a relationship between accounting principle and management decision making process coupled with the establishment of following facts: To what extent accounting information is relevant to management decision making process. Significance of use of accounting information in decision making process. To highlight and make certain recommendations about the importance of accounting principles in context of managerial decision making process.

Research Significance:
This research paper is designed with a sincere effort to productively contribute towards the existing body of knowledge. This document will help a layman and management alike to snapshot that how accounting information drives and guides managerial decision at various levels.

Literature Review

1 Nicolaou, A.

A Contingency Model of Perceived effectiveness in Accounting Information System: Organisational Coordination and Control Effects Accounting Information Systems, Transaction Processing and Control

International Journal of Accounting Information Systems

2 Boockhodt, J.

3 Markus, M.L. and Pfeffer, J. 4 Ives, B. 5 Kren, L.

Power and the Design and Implementation of accounting and Controlling Accounting, Organisation and Society Systems Measurement of User Information Satisfaction Budgetary Participation and Management Performance: The Impact of Information and Environmental Volatility Budgetary Participation and Management Performance: The Impact of Information and Environmental Volatility Principles of Accounting Financial Accounting Accounting practice effectiveness and financial performance of Thai listed firms: mediating effects of decision making efficiency for tax management, competent resource allocation, and strategic planning success Accounting Information and Decision-Making The Role of accounting information in decision-making processes in a German dairy cooperative Accounting information for managerial decision-making in shareholder management versus stakeholder management Communications of ACM The Accounting Review

6 Nnenna, O.M. 7 Needles, Jr. B.E., Anderson, H. R.; Caidwell, J.C. 8 Benjamin, James .J. Francis, Arthur .J. Strawser, Robert H.

British Journal of Science . .

9 Hanpuwadal, Nupakorn, Ussahawanitchakit&Phapruke

European Journal of Management

10 Bruns, W.J.

. The Accounting Review

11 Heidhues, E. & Patel, C.

12 Wall,F. & Greiling,D.,

13 Bali, J.O.

Use of accounting information as a tool for decision making

Federal University of Technology

14 Collier, M. P., Bus, B., Comm, M., Dip, G.

Accounting for managers -Interpreting Accounting information for decision making

Aston Business School, Aston University

15 Anderson D. and Raun D 16 Simon, R.

Information Analysis in Management Accounting Accounting Control Systems and Business Strategy: An Empirical Analysis The Usefulness of Management Accounting Systems, Functional Differentiation and Managerial Effectiveness

. Accounting Organization Society

17 Mia, L. and Chenhall, R.H.

Accounting Organization Society

Amna Maryam

Problem Statement
To study and analyze the effect of accounting information on managers decision making

Hypothesis
Ho: Accounting information does not affect the managers decision making. H1: Accounting information does affect the managers decision making.

Theoretical Framework
Accounting Information Managerial Decision Making

Ammara Kausar

Methodology
Data collection
Population: Our population will be the managers of all corporate sectors in Rawalpindi and Islamabad, Pakistan. Sample: Our sample encapsulates the managers Faysal Bank Limited (Saddar Branch) Askari Bank Limited Habib Bank Limited Standard Chartered Bank Bank Dubai MCB Sindh Bank Silk Bank FBR regional tax office FFC State Life Insurance Company U-fone Telenor

Research Instrument:
We are using Questionnaire as a research instrument in our research. Data Collection Techniques: All the questionnaires except 9 are dropped and filled personally. Nine questionnaires are e mailed and filled electronically.

Anum Saba

SPSS
Reliability:
Warnings The space sav er method is used. That is , the covariance matrix is not c alculated or us ed in the analysis.

Cas e Proce ss ing Sum m ary N Cases V alid Ex cludeda Total 100 0 100 % 100.0 .0 100.0

a. Listw ise deletion bas ed on all variables in the proc edure.

Reliability Statis tics Cronbac h's A lpha .256 N of Items 17

Frequencies:
Statistics N Mean Median Mode Skew ness Std. Error of Skew ness Kurtosis Std. Error of Kurtosis Valid Missing DM 100 0 2.2557 2.2857 2.00 a .482 .241 .607 .478 AI 100 0 2.1743 2.1429 2.29 .282 .241 -.140 .478

a. Multiple modes exist. The smallest value is show n

Frequency Table:
DM Frequency 2 1 7 3 9 16 10 16 9 9 2 8 5 2 1 100 Percent Valid Percent 2.0 2.0 1.0 1.0 7.0 7.0 3.0 3.0 9.0 9.0 16.0 16.0 10.0 10.0 16.0 16.0 9.0 9.0 9.0 9.0 2.0 2.0 8.0 8.0 5.0 5.0 2.0 2.0 1.0 1.0 100.0 100.0 Cumulative Percent 2.0 3.0 10.0 13.0 22.0 38.0 48.0 64.0 73.0 82.0 84.0 92.0 97.0 99.0 100.0

AI Frequency 1 5 7 11 7 10 12 18 6 8 3 5 3 1 3 100 Percent Valid Percent 1.0 1.0 5.0 5.0 7.0 7.0 11.0 11.0 7.0 7.0 10.0 10.0 12.0 12.0 18.0 18.0 6.0 6.0 8.0 8.0 3.0 3.0 5.0 5.0 3.0 3.0 1.0 1.0 3.0 3.0 100.0 100.0 Cumulative Percent 1.0 6.0 13.0 24.0 31.0 41.0 53.0 71.0 77.0 85.0 88.0 93.0 96.0 97.0 100.0

Valid

1.29 1.43 1.57 1.71 1.86 2.00 2.14 2.29 2.43 2.57 2.71 2.86 3.00 3.29 3.86 Total

Valid

1.00 1.43 1.57 1.71 1.86 2.00 2.14 2.29 2.43 2.57 2.71 2.86 3.00 3.14 3.29 Total

Correlations:
Cor relations DM DM Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N 1 100 .641** .000 100 AI .641** .000 100 1 100

AI

Regression:

**. Correlation is significant at the 0.01 level (2-tailed).

Variables Enter ed/Re movebd Model 1 Variables Entered a AI Variables Removed . Method Enter

a. All requested variables entered. b. Dependent Variable: DM

Model Summ ary Model 1 R R Square a .641 .411 Adjusted R Square .405 Std. Error of the Estimate .35769

a. Predictors: (Constant), AI
ANOVAb Model 1 Sum of Squares 8.739 12.539 21.277 df 1 98 99 Mean Square 8.739 .128 F 68.301 Sig. .000 a

Regression Residual Total

a. Predictors: (Constant), AI b. Dependent Variable: DM

a Coe fficients

Model 1

(Cons tant) AI

Unstandardiz ed Coefficients B Std. Error .880 .170 .633 .077

Standardized Coefficients Beta .641

t 5.166 8.264

Sig. .000 .000

a. Dependent Variable: DM

Interpretations
Reliability analysis is represented by alpha. Alpha shows the reliability of primary data collected using research instrument. For data to be reliable alpha must be equal to or greater than 0.05 in our case due to internal data inconsistency alpha is 0.256.This figure shows that there exist high data inconsistency. R squared R2 is a coefficient of determination, which actually explains variations in dependant variable caused by independent variable. Greater the value of R square greater change will be identified and consequently more effective the model will be. In our research, value of R square is 0.411, which shows that 41.1% of change in dependant variable is caused by independent variables, and rest of the 59.9 % is caused by the variables outside the model. Here the value of R squared is almost significant, identifying a pretty significant change in dependant variable caused by independent variable rendering the model effective. The model operates at overall significance of 0.000.

Sana Afzal

Deduction
Acceptance/Rejection of Null hypothesis (Ho)

Based on the whole analysis it is concluded that null hypotheses i.e. Ho is accepted that is Ho: Accounting Information Managerial Decision Making. does not affect

Research Limitations
Scope of research is lemmatized because of following: Sample size is limited. Though it is a fair representative of whole population but it could have been more to validate the research findings. People at work places are not much co operative to volunteer themselves. In public sector organizations aged managers were not able to read and comprehend questions. Time constraint.

Nazish Muzzafar

Conclusion
It can be better concluded from the afore mentioned discussion coupled with statistical analysis that there exist a positive relationship between both the variables under discussion I.e. accounting information does affect managerial decision making. This research is of basic nature and it will open the new horizons for further probe in.

Thank you !

Question Answer Session